The U.S. Supreme Court recently granted certiorari in Kirtsaeng v. John Wiley & Sons, Inc. in order, once again, to review the proper standard that district courts should follow for awarding attorneys’ fees to prevailing parties in copyright infringement actions. The Copyright Act authorizes, but does not require, a court to award attorneys’ fees to a prevailing party.1 In a 1994 decision, the Supreme Court leveled the playing field and held that prevailing plaintiffs and defendants are to be treated alike and that attorneys’ fees are to be awarded to prevailing parties only as a matter of the district court’s discretion.Fogerty v. Fantasy, 510 U.S. 517 (1994). In Fogerty, the Supreme Court expressly rejected an automatic recovery of attorneys’ fees, and as guidance adopted several non-exclusive factors for courts to consider in exercising their discretion: “frivolousness, motivation, objective unreasonableness (both in the factual and in the legal components of the case) and the need in particular circumstances to advance considerations of compensation and deterrence.” Interestingly, the Supreme Court cited these same factors when it made recent landmark rulings on attorney fee awards in patent cases.
With the passage of time, different circuits have developed diverging approaches to applying the Fogerty factors. For example, the Fifth and Seventh Circuits employ a presumption in favor of attorneys’ fees for a prevailing party that the losing party must overcome. In contrast, the Ninth and Eleventh Circuits award attorneys’ fees when the prevailing party’s successful claim or defense advances the purposes of the Copyright Act. The Third, Fourth and Sixth Circuits primarily employ the several “nonexclusive factors” the Supreme Court identified in Fogerty. Finally, the Second Circuit places “substantial weight” on whether the losing party’s claim or defense was “objectively unreasonable.” Thus, in the Kirtsaeng case, as to which the Supreme Court has now granted certiorari, the Second Circuit affirmed the district court’s denial of attorneys’ fees, stating that the lower court correctly placed substantial weight on the reasonableness of the losing party’s position.
In essence, then, a party could be awarded fees in one circuit but be denied fees in another circuit on precisely the same facts for the sole reason that circuit law differs. Moreover, since appellate courts review lower court decisions to award or refuse attorneys’ fees to prevailing parties under an abuse of discretion standard, district court decisions are most often affirmed—meaning that there is often little guidance from appellate courts as to how to properly apply any given circuit’s test.
In fact, our recent experience as counsel for prevailing parties in copyright cases in courts of the Fifth Circuit suggests that district courts within the same circuit have diverged widely on awarding attorneys’ fees, even in fairly similar situations. For example, in one case the instant authors prevailed on summary judgment against a plaintiff’s copyright infringement claim of a program proving that the entirety of the plaintiff’s claim was based on nothing more than non-copyrightable functional similarities between the competing computer programs. The district court denied fees and the Fifth Circuit upheld the denial despite the Fifth Circuit’s law that fees to the prevailing party should be “the rule rather than the exception” in copyright cases pursuant to McGaughey v. Twentieth Century Fox Film Corp., 12 F.3d 62, 65 (5th Cir. 1994).
On the other hand, one of the instant authors prevailed on a client’s claim for attorneys’ fees based, at least in part, on the Copyright Act. In Spear Marketing, Inc. v. BancorpSouth et al., No. 3:12-cv-03583 (N.D. Tex.), the court awarded the defendants with a recovery of attorneys’ fees after successfully defeating the plaintiff’s claims that trade secrets embedded in software had been taken or copied to create competing software. Although originally pled as a state law theft case, the defendants removed the case to federal court on copyright preemption and the district court retained jurisdiction. The Fifth Circuit affirmed the lower court’s copyright preemption findings, and in doing so decided for the first time in the Circuit that state law claims based on ideas fixed in tangible media are preempted by 17 U.S.C. § 301(a). See 791 F.3d 586 (5th Cir. 2015). Following the appeal, and applying the Fifth Circuit’s “discretionary but routinely awarded” test, the district court analyzed whether the suit was frivolous, improperly motivated or objectively unreasonable, and whether granting fees advances considerations of compensation and deterrence. The court determined an award of fees was appropriate under the Copyright Act.
National uniformity in copyright law is extremely important. A Supreme Court decision in the Kirtsaeng case should provide much needed clarity as to the standards for awarding attorneys fees in copyright cases. We will also be curious to see whether, given the recent rise in copyright “trolls,” the Court will make it much easier to recover attorney fee awards in copyright lawsuits—as it has recently done in patent litigation.